The euro and the dollar have reached parity for the first time in 20 years, signalling the market’s assumption that the European economy is heading for a deep recession as a result of Russia’s invasion of Ukraine, writes Euronews.

Today, 1 EUR equals 1 USD. The shift means European companies and consumers will pay more for the goods and services they import, while European exports become immediately cheaper in international markets.

The euro has experienced a dramatic loss of value since early February when it was worth over USD 1.13. The fall accelerated in recent weeks as fear spread that Russia, the EU’s main energy provider, was going to completely cut off gas flows in retaliation for Western sanctions.

So far, 12 EU countries have suffered a total or partial reduction in Russian gas. Supplies from the Nord Stream 1 pipeline stopped earlier this week for a planned 10-day maintenance. It’s unclear if the Kremlin will order the suspension to extend beyond that deadline and become indefinite.

“Let’s prepare for a total cut-off of Russian gas. This is now the most likely option”, Bruno Le Maire, France’s finance minister, has said.

All eyes will be on the euro to see if it ends up falling below the American dollar. The last time this happened was in November 2002, when the euro was worth USD 0.99.